Registration of FIR Mandatory on ED Information Under Section 66(2) PMLA: Kerala HC

The Kerala High Court has stripped the State Police of its discretion to conduct preliminary enquiries when the Enforcement Directorate shares information under Section 66(2) of the Prevention of Money Laundering Act, 2002, ruling that such disclosures regarding cognizable offences necessitate the immediate registration of a First Information Report (FIR).

In a verdict carrying significant implications for federal investigative synergy and political accountability, Justice A. Badharudeen held that when information passed by the Enforcement Directorate (ED) is exhaustive and discloses the commission of scheduled offences, it acts as an adequate substitute for a preliminary enquiry, leaving the State machinery with no choice but to initiate criminal prosecution.

Mandatory Registration of FIR Upon ED Disclosures

Justice A. Badharudeen, while presiding over a writ petition filed by a social activist, navigated the complex intersection of federal anti-money laundering investigations and state-level anti-corruption proceedings. The court addressed the pivotal question of whether the State Police retains the option to conduct a preliminary enquiry before registering an FIR when information under Section 66(2) of the Prevention of Money Laundering Act, 2002 is shared by the ED.

The Court's Rationale on Section 66(2) Disclosures

The court observed that the purpose of a preliminary enquiry is to screen frivolous complaints, but such a shield cannot be used to stifle investigations where a central agency has already collected substantial material. The Court, in its reasoning, observed: "When the information passed by the E.D under Section 66(2) of the PMLA, itself discloses commission of cognizable offence/offences, the same occupies the pew of preliminary enquiry report or the same is an adequate substitute in the place of a preliminary enquiry report, in a such case, registration of FIR would become mandatory and in the said circumstances, the State Agency has no option to go for preliminary enquiry (particularly another preliminary enquiry), as the scope of such enquiry is not wide enough to go beyond the information under Section 66(2) of the PMLA."

The Court further clarified that while the Kerala Police Act, 2011 allows the Government to form special units under Section 21, it does not empower the State Police Chief to order a preliminary enquiry when the disclosure already contains sufficient primary materials including witness statements and bank transaction details.

Directions Issued to Statutory Authorities

The Court has following directions:

"The decision of the Government to form a Special Team to conduct enquiry as per Ext.P9 without registering FIR is found illegal in the facts of the case and therefore, the same is set aside. Consequently, the 3rd respondent, the Director, Vigilance and Anti-Corruption Bureau, Thiruvananthapuram, is specifically directed to register FIR based on the information furnished under Section 66(2) of the PMLA for the offences disclosed therein under the PC Act, against the suspected persons specifically mentioned therein, forthwith, without any delay, and to investigate the allegations through competent officers of the Vigilance and Anti-Corruption Bureau and file the final report, without much delay. It is specifically ordered that the DGP or the head of the Special Investigation Team, having custody of the information under Section 66(2) of the PMLA shall hand over the same to the 3rd respondent, forthwith, and the 3rd respondent shall obtain the same for the purpose of registering FIR, without fail and proceed further, in accordance with law. In this connection, the E.D. is directed to forward all necessary documents to the 3rd respondent, forthwith, and the 3rd respondent is free to call for any other documents required for the purpose of investigation after registering FIR."

Background

The case originated from a writ petition filed by Adv. K.M. Shajahan, who alleged that the State Government and Police Chief failed to act upon information forwarded by the ED. The ED's investigation, initiated following a Companies Act, 2013 probe into Cochin Minerals and Rutile Limited (CMRL) and M/s Exalogic Solutions, allegedly revealed bribes paid to public servants under the guise of IT consultancy services. The ED shared this information with the State Police Chief on September 7, 2026, for registration of a separate FIR under the Prevention of Corruption Act, 1988.

Instead of registering an FIR, the State Police Chief issued an order on September 23, 2026, forming a Special Investigation Team to conduct a 'preliminary enquiry.' The petitioner challenged this as a move to protect the corrupt. The State argued that registration of an FIR is not mandatory and that the Government must balance allegations with the rights of suspected persons, citing earlier dismissals of private complaints in Krishnan A. v. Kerala State Co-operative Marketing Federation Ltd., Kochi and Others and other criminal revisions. The Court distinguished these prior rulings, noting that those were based on 'suspicions' in private complaints, whereas the current matter involves findings by a competent central agency under Prevention of Money Laundering Act, 2002.

Case Details:
Case No.: WP(CRL.) NO. 1476 OF 2026
Neutral Citation: 2026:KER:78014
Case Title: ADV.K.M.SHAJAHAN Vs. STATE OF KERALA AND OTHERS
Appearances:
For the Petitioner(s): SRI.V.SETHUNATH, SHRI.THOMAS ABRAHAM, SHRI.SHAMNAS S.
For the Respondent(s): SRI.K.JAJU BABU (Advocate General), SMT.REMA R. (Special Public Prosecutor), SRI.SAJEEVAN P.K (Special Public Prosecutor), SRI.JAISHANKAR V.NAIR (Standing Counsel for ED)

Source: 2026 CaseBase(KER) 29489